Wednesday, December 8, 2010

Saving Skills #1

Hey Everybody!

So we know that the #1 rule of having financial success is being able to save your own money. And the only way to save money is to not spend it…as much…ok maybe a little bit…or all of it. See, we all have trouble saving our money, when there are just so many shiny new things to go out and buy.

So here’s the trick, the famed magic rule of money saving...

It starts with knowing what your expenses are. So what do you spend on? Clothes? Food? Coffee? Cell phone bills? Movies? The new iPhone? All of the above (in a small voice...) It’s okay, its not just you.

So let’s say you’re like sir-spends-a-lot here and you spend on all of that every week. Well, unless you’ve got a part-time job as the CEO of Coca-cola, you’re probably not making enough to cover $195. That’s right. If you’re spending on regular everyday things like this (excluding the iPhone and cell bill), you may actually be spending that much. And if you’re working minimum wage... Um, let’s just say that mummy and daddy won’t be around to pay your bills forever (please note that cashsmart does not condone calling your parents up for allowance at age 21. Just saying.)

Alright, so now you know how much you’re spending. Maybe its ten bucks, maybe its twenty, or maybe its two hundred. But that doesn’t mean anything until you know how much you’re making to begin with. If you’re the typical teenager, you’re making minimum wage. Sucks doesn’t it? (Also, to any teen CEOs out there-- Leave. Now. You’ve just been banned from this site.)

Anyway, minimum wage is probably somewhere between $9.50 and $10.50 per hour, depending on where you live in Canada. That means, even if you’re working an 18 hour work week (which is the legal max for teens), you’re making between $171 and $189 every week (ouch.)

Here’s where the magic comes in to play: if you want to be saving, the amount of money that you make must be significantly less than the amount that you spend. I know, it’s pretty crazy.

But obviously, it’s not as easy as it sounds, because if it were, everyone would be saving. So, let’s break it down for you.

We’re starting a series here on cashsmart dedicated just to budgeting and saving. So we hope you got a better idea of where you stand financially today, and next time we’ll lay down some handy tips!